Canadians are overpaying for text messages by billions of dollars a year. The country's major wireless providers are charging more for simple SMS messages than for bandwidth-heavy tablet data.
Let's agree that a text message is data. Rogers, for instance, charges $15 for 250 megabytes of iPad data, which works out to just under 17 cents per MB. Rates are comparable at Bell and Telus.
A standard 160-character SMS message contains a fraction of a MB, or roughly 0.5 KB of data. At the going data rate, a 0.5KB text should cost 0.008 cents -- or, well, almost nothing.
But it doesn't. It costs nearly 20 times more than that, at 15 cents at each of the big three companies. Canadians send an average of 163 million texts per day. At 15 cents per text, that's an extra $24.5 million a day for telecoms, or $8.8 billion a year.
Text message revenues likely aren't quite that high because many consumers don't pay per text and instead spring for unlimited text add-ons which run about $15 a month. But it's worth considering that if carriers were charging 0.008 cents per text, you'd have to send 1,875 text messages in a month to justify the add-on.
When presented with QMI's calculations, Bell deferred comment to Marc Choma, spokesman for the Canadian Wireless Telecommunications Association.
Choma said it's impossible to calculate a carrier's cost for a single text message.
"You would have to take into account the billions of dollars that you would have to invest in a wireless network in order to send that one text message," he said, adding there's also marketing, sales and support staff costs to account for.
But the same can be said for data sent via tablet. That still doesn't explain why data sent via text is more expensive than data on the latest and greatest gadget.
"Market forces are going to decide what someone is going to pay for a particular service, whether it's a text message or a megabyte of data, whether it's a picture message, a ring tone or a whatever anyone is downloading," Choma said.
Telus didn't provide comment other than to call QMI's calculations "overly simplistic" because different data services require different network resources. A Telus spokesman also pointed to the company's own analysis that found its text message rates are 4th lowest in the OECD.
Still, more advanced mobile users can replicate the same message on a different platform, such as a tablet, and take advantage of those lower costs, said Amit Kaminer of the SeaBoard Group, a wireless consulting firm.
Rogers did not respond to repeated requests for comment.
GAME CHANGER?
The introduction of Apple Inc.'s iMessage could cut a swath into the incumbents' lucrative text messaging schemes. Similar to RIM's BlackBerry Messenger, iMessage uses an Apple ID to send and save chats between iPhone users, bypassing the need to text message.
Let's agree that a text message is data. Rogers, for instance, charges $15 for 250 megabytes of iPad data, which works out to just under 17 cents per MB. Rates are comparable at Bell and Telus.
A standard 160-character SMS message contains a fraction of a MB, or roughly 0.5 KB of data. At the going data rate, a 0.5KB text should cost 0.008 cents -- or, well, almost nothing.
But it doesn't. It costs nearly 20 times more than that, at 15 cents at each of the big three companies. Canadians send an average of 163 million texts per day. At 15 cents per text, that's an extra $24.5 million a day for telecoms, or $8.8 billion a year.
Text message revenues likely aren't quite that high because many consumers don't pay per text and instead spring for unlimited text add-ons which run about $15 a month. But it's worth considering that if carriers were charging 0.008 cents per text, you'd have to send 1,875 text messages in a month to justify the add-on.
When presented with QMI's calculations, Bell deferred comment to Marc Choma, spokesman for the Canadian Wireless Telecommunications Association.
Choma said it's impossible to calculate a carrier's cost for a single text message.
"You would have to take into account the billions of dollars that you would have to invest in a wireless network in order to send that one text message," he said, adding there's also marketing, sales and support staff costs to account for.
But the same can be said for data sent via tablet. That still doesn't explain why data sent via text is more expensive than data on the latest and greatest gadget.
"Market forces are going to decide what someone is going to pay for a particular service, whether it's a text message or a megabyte of data, whether it's a picture message, a ring tone or a whatever anyone is downloading," Choma said.
Telus didn't provide comment other than to call QMI's calculations "overly simplistic" because different data services require different network resources. A Telus spokesman also pointed to the company's own analysis that found its text message rates are 4th lowest in the OECD.
Still, more advanced mobile users can replicate the same message on a different platform, such as a tablet, and take advantage of those lower costs, said Amit Kaminer of the SeaBoard Group, a wireless consulting firm.
Rogers did not respond to repeated requests for comment.
GAME CHANGER?
The introduction of Apple Inc.'s iMessage could cut a swath into the incumbents' lucrative text messaging schemes. Similar to RIM's BlackBerry Messenger, iMessage uses an Apple ID to send and save chats between iPhone users, bypassing the need to text message.